Correlation Between Broadwind and INTER CARS
Can any of the company-specific risk be diversified away by investing in both Broadwind and INTER CARS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Broadwind and INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and INTER CARS SA, you can compare the effects of market volatilities on Broadwind and INTER CARS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Broadwind with a short position of INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and INTER CARS.
Diversification Opportunities for Broadwind and INTER CARS
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Broadwind and INTER is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA and Broadwind is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Broadwind are associated (or correlated) with INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of Broadwind i.e., Broadwind and INTER CARS go up and down completely randomly.
Pair Corralation between Broadwind and INTER CARS
Assuming the 90 days trading horizon Broadwind is expected to generate 2.58 times more return on investment than INTER CARS. However, Broadwind is 2.58 times more volatile than INTER CARS SA. It trades about 0.09 of its potential returns per unit of risk. INTER CARS SA is currently generating about 0.14 per unit of risk. If you would invest 169.00 in Broadwind on October 11, 2024 and sell it today you would earn a total of 24.00 from holding Broadwind or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Broadwind vs. INTER CARS SA
Performance |
| Timeline |
| Broadwind |
| INTER CARS SA |
Broadwind and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and INTER CARS
The main advantage of trading using opposite Broadwind and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, INTER CARS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in INTER CARS will offset losses from the drop in INTER CARS's long position.| Broadwind vs. MAGNUM MINING EXP | Broadwind vs. De Grey Mining | Broadwind vs. ARROW ELECTRONICS | Broadwind vs. Perseus Mining Limited |
| INTER CARS vs. Nishi Nippon Railroad Co | INTER CARS vs. TRAINLINE PLC LS | INTER CARS vs. Cleanaway Waste Management | INTER CARS vs. Broadwind |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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